Navigating the Impact of EU Consumer Credit Directive on BNPL Providers

The EU Consumer Credit Directive review has implications for BNPL providers, increasing onboarding costs and necessitating more robust credit checks.

BNPL firms face challenges in assessing affordability due to incomplete data sharing among bureaux, affecting risk assessment accuracy.

Soft searches and pre-checks are utilized by some credit providers, but data uniformity across bureaux remains a concern.

Compliance with the directive requires BNPL providers to evaluate consumers' creditworthiness thoroughly and ensure repayment capability.

Key considerations for BNPL firms include negotiating data pricing transparently and gaining a complete view of market rates.

Conducting a benchmarking exercise helps identify potential cost savings and informs future negotiations with data providers.

Renegotiating contract terms mid-contract or upon renewal can lead to substantial cost savings without switching data suppliers.

Leveraging data from multiple bureau sources enhances pricing leverage, diversifies data sources, and fills gaps in credit history.

EU parliamentary changes and FCA initiatives aim to improve credit search accuracy and affordability assessment standards.

Credit providers must take proactive steps to comply with regulatory changes and ensure access to accurate and affordable data for informed decision-making.